NALC statement on USPS “default”

WASHINGTON, July 30, 2012 /PRNewswire-USNewswire/ — The pending August 1st “default” of the U.S. Postal Service is not primarily the result of a bad market or even bad operations, but of bad legislating by Congress. The only thing that will happen on Wednesday is that the Postal Service will not pay $5.6 billion into a fund for future retiree health benefits — a fund that already has $45 billion, enough to pay for decades of future retiree health care.

At the National Association of Letter Carriers (NALC), our two highest priorities are ensuring the long-term health of the Postal Service and protecting the well being of our country’s active and retired letter carriers. If we thought our retired members were in danger of losing their health care, we’d be screaming bloody murder about it. But the retirees are fine and so is their health insurance. And on August 1st, the mail will continue to be delivered and employees will continue to be paid.

No other U.S. institution — private or government — is required by law to set aside money for future retiree health benefits. But in 2006, Congress imposed this requirement on the Postal Service, and the resulting annual payments are the reason the Postal Service’s financial problems, while very real, appear to be so much worse than they actually are. In fact, according to USPS financial statements, pre-funding accounts for 94 percent of the red ink in the first two quarters of fiscal 2012 and 85 percent of all red ink since pre-funding went into effect in 2007.

Still, this bogus “default” has proved to be useful rhetoric to those who want to dismantle the Postal Service, especially those who for ideological or competitive reasons want it privatized. But we should all remember: the Postal Service doesn’t use any taxpayer money.

As we have said before, the Postal Service does have very real challenges to address as the volume of first class mail declines and Americans rely more and more on the Internet to convey personal and business messages. On the other hand, there is real opportunity as an increasing number of products purchased online are shipped through the Postal Service.

Because of the panic that results each time the Postal Service must find funds to make the annual pre-funding payments, postal management has become more focused on cutting service than on developing a coherent business plan for the future.

And Congress has failed to deal with the unfair and unaffordable financial burden of pre-funding, which is the one thing that could provide the Postal Service some much-needed breathing room to address its long-term challenges in a strategic way.  Some in Congress — it seems —would rather cut key services to Americans than give the Postal Service a real chance to thrive in the 21st century.

In short, Wednesday’s default won’t be committed by the Postal Service, but by Congress.